What are California's Cobra Requirements?
The Consolidated Omnibus Budget Reconciliation Act (COBRA) became a federal law in 1986. The law required employer group health insurance plans to continue coverage for up to 18 months when employees lost their jobs or started working fewer hours. California created additional COBRA coverage requirements with the creation of Cal-COBRA in 1997. California's COBRA rules required more employers to provide coverage for longer periods for California workers.
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Covered Workers
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The federal COBRA law applies to employers who provide group health plan benefits for at least 20 employees, based on the workforce on the payroll during over half the prior calendar year. Part-time employees count according to the number of hours worked -- half a regular work week equals half an employee. Cal-COBRA expands coverage requirements to employers with two to 19 employees. COBRA and Cal-COBRA rules also apply if the employee loses group coverage because the employer reduces her hours of work.
Requirements for Dependents
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If the employee's dependents -- spouse and children -- received health coverage through an employee's employer, COBRA and Cal-COBRA rules require coverage for dependents as well. The coverage must have existed the day prior to the terminating event. If the employee adopts a child or has a new baby during the COBRA coverage period, the plan must cover the additional dependent. Terminating events for dependents can be different than those that cause the employee's loss of coverage. For example, if the dependent loses coverage due to divorce from or death of the employee, the dependent has COBRA coverage protection for up to 36 months, under both federal and state plans.
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Required Qualifying Events
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Job termination due to gross willful misconduct will prevent COBRA coverage. Acceptable terminating events include job loss or reduction of hours below the number needed to qualify for work coverage, loss of coverage for the dependent because the worker became eligible for Medicare and lost work-related health coverage, divorce or separation of the spouse, or death of the employee. If an employee's child loses coverage under her parent's plan due to events such as the child's marriage, the child can qualify for his own COBRA health insurance coverage.
Required Coverage Length and Premiums
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Federal COBRA coverage lasts 18 months and requires and additional 11 months of coverage for special qualifying events. Cal-COBRA coverage can increase the additional 11 months to 18 months for a total of 36 months. Under federal rules, dependents could receive an additional 18 months of coverage if they lose coverage because of a qualifying event. During the first 18 months of federal COBRA, the premium is 102 percent of the cost -- both the employer and employee's share -- for the same coverage provided other employees, plus two percent for administrative expenses. The COBRA beneficiary must pay the entire premium. Federal COBRA premiums increase to 150 percent of the usual premium for extended months of eligibility. If the employee receives Cal-COBRA during the first 18 months instead of federal COBRA, the premium is 110 percent total instead of the federal rate of 102 percent plus 2 percent costs. However, the premium for the second 18-month period remains at 110 percent for Cal-COBRA rather than the 150 percent for extended federal COBRA.
Filing Deadlines
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When an employee loses his group health insurance coverage, the employer must notify the group plan's administrators within 30 days of the loss of coverage. The plan administrator then has 14 days to notify the employee of his COBRA coverage rights. The employee has 60 days to apply for COBRA or Cal-COBRA coverage. The 60-day period starts with the later of two dates: the last day of group coverage or the date of the COBRA notice rights. If dependents experience a COBRA-qualifying event, the deadline for filing is within 60 days of the event's date. The COBRA beneficiary has 45 days to make the first COBRA premium payment to avoid loss of coverage. The 45 day period begins with the date the employee mailed in his letter electing COBRA coverage.
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